Saccharomyces cerevisiae RAD54 gene functions in the formation of heteroduplex DNA, a key intermediate in recombination processes. Rad54 is monomeric in solution, but forms a dimer/oligomer on DNA. Rad54 dimer/oligomer alters the conformation of the DNA double helix in an ATP-dependent manner, as revealed by a change in the DNA linking number in a topoisomerase I-linked reaction. DNA conformational alteration does not occur in the presence of non-hydrolyzable ATP analogues, nor when mutant rad54 proteins defective in ATP hydrolysis replace Rad54. Accordingly, the Rad54 ATPase activity is shown to be required for biological function in vivo and for promoting Rad51-mediated homologous DNA pairing in vitro. Taken together, the results are consistent with a model in which a Rad54 dimer/oligomer promotes nascent heteroduplex joint formation via a specific interaction with Rad51 protein and an ability to transiently unwind duplex DNA.